There have been a lot of people announcements lately, particularly at the lofty levels of the industry. Some of them are the result of people unhappy with internal restructuring. Others seem to be opportunistic in nature. But my thoughts on all of these is that people are situating themselves for the next big thing which I'm hearing suggested will not happen in 2010 but rather in 2011. That could be a strategy, a company or just someplace that they think they'd be happier. Of course, when you're in demand, you have a stronger negotiating position but as you would like to believe is always the case, companies need to find people who not only have the right experience but are also respected in the industry and fit in culturally. I think this last item may be the most challenging in making a decision about hiring someone. After all, don't you agree that you don't really know someone until you live with them?
Still on the job subject. On a regular basis, I talk with people who are looking for jobs. Some of them are already employed with two-five years experience and looking to step up (or over as the case may be). Others are recent graduates who are finding it difficult to get their foot in the door. As it seems that there aren't really any firms that are 'employee advocates' may I suggest that you contact me if you're looking for someone. I have a pretty good track record of connecting people that end up getting hired and while I don't perform all the services of a professional recruiter I think I have a pretty good feel about people and I have a pretty good network....(P.S. my help is free!)
Tomorrow would have been my father's 93rd birthday. I remember, as he got older, when I'd see or talk with him and I'd ask him, "How are you doing?" many times his response would be, "Well, I'm still here." And I'd tell him that he's going to be around for a long time. And, compared to others, he was. But as many of you have experienced (and shared with me) the process of letting go takes time. It's sort of like maybe he has been on an around the world cruise and hasn't had time to write or call and that one of these days he'll be back and tell me all about it. And maybe that is the journey he's on; maybe he's experiencing things that he always wanted to but didn't have the time or money to do them.
And that brings me to my last thought this week: There are some things that come up in our lives that are once in a lifetime. I'm not talking about the big things but rather the small things. The ones where you say to yourself, "I'll do that if i have the time" or "I'll visit that friend of mine who is very sick next week" or "Well, this won't be the only time I'll get to do that." But, you know what, sometimes it is the only chance you'll have. Sometimes that friend won't be around next week and you'll say, "What was more important than taking some time to just do it?" So, I guess what I'm thinking about is about priorities and making decisions about what is important because sometimes it is a once in a lifetime opportunity, for real.
On the road....
May 7-16: California
May 17-18: Midwest
May 20-24: My brother and I take on NY
July 13-15: NMS Conference at The Montage
These are my views and not that of my employer.
Friday, April 30, 2010
Friday, April 23, 2010
Two roads diverged in a yellow wood......
In line with my policy of non-attribution (except in the rare case where someone may want their name mentioned) I want to share with you some random things I heard and read this week. But first, something of my own: I'm going to shoot the next person on a panel who uses the phrase "Extend and Pretend." Period.- Surround yourself with great people - and you'll get great things." However, it isn't enough just to surround yourself, you must also take care and nurture the people that surround you. Remember, praise is power. Invest praise you receive from your superior. Pass praise to your team where it will encourage still greater performance. When you share praise, your team will know you sincerely appreciate their value.
- The 'snap-back' in competition for Class A, core-properties is giving the industry a false sense of "we're back in business."
- Judicious investing is still the theme with many institutional investors, however
- More investors are showing more interest in making new investments in 2010 (many with managers whom they have existing, healthy relationships with)
- There is a serious interest in investing with emerging managers
- "I don't buy the current optimism and will be trying to remain selective and demanding on pricing."
- "Green shoots" are mostly in apartments and industrial (Ditto the above for the phrase "Green Shoots.)"
- Strong job growth expected by end of 2010 but not strong enough to make a difference. 2011 will be the year
- Some investors are looking at the possibility of political risk in the U.S. for the first time
- At a meeting of institutional investors and managers the main subjects of discussion were: Lessons Learned and Best Practices with respect to risk management (Seems like I hear the term "Lessons Learned" almost as much as "Extend and Pretend").
- The US economy rebounded strongly in the second half of 2009. The the recovery could be slow and less robust (U-shaped) than the last ones. Unemployment Still Lagging. Cautious Consumer Spending. Low Inflation Pressure - For Now. Home Prices Improving.
- When did the term 'bank' stop referring to a real bank and instead refers to an Investment Bank?
- RCA 1st Quarter in review: Sales volume reached $15.4 billion, representing a 50% increase from Q1’09 with every property type registering higher volume. Core rather than distressed sales were primarily behind the volume gains despite the huge overhang of distressed situations. Sharp declines in cap rates were recorded for certain assets due to competition among buyers and the rapidly improving debt markets that are allowing buyers access to low interest rates.
- Performance in the non-listed property market saw a turning point in 2009, according to the results of the INREV Index. In local currencies, the INREV Index returned -7.8% in 2009 compared to -19.8% in 2008. (Still negative but dramatically less so)
Governments, businesses and most travelers, irritated by disrupted itineraries and worried about lost productivity, are delighted to see planes back in the sky. But I, for one, wish this blessedly jet-free interlude could have continued a little longer. In the eccentric, ground-level adventures of some stranded passengers — 700-mile taxi rides through Scandinavia, for instance, perhaps a horse-drawn stagecoach over the Alps if things got really desperate — I’m reminded of the romance we trade away each time we shuffle aboard an airplane.
In the five decades or so since jets became the dominant means of long-haul travel, the world has benefited immeasurably from the speed and convenience of air travel. But as Orson Welles intoned in “The Magnificent Ambersons,” “The faster we’re carried, the less time we have to spare.” Indeed, airplanes’ accelerated pace has infected nearly every corner of our lives. Our truncated vacation days and our crammed work schedules are predicated on the assumption that everyone will fly wherever they’re going, that anyone can go great distances and back in a very short period of time.
So we are condemned to keep riding on airplanes. Which is not really traveling. Airplanes are a means of ignoring the spaces in between your point of origin and your destination. By contrast, a surface journey allows you to look out on those spaces — at eye level and on a human scale, not peering down through breaks in the clouds from 35,000 feet above — from the observation car of a rolling train or the deck of a gently bobbing ship. Surface transport can be contemplative, picturesque and even enchanting in a way that air travel never will be.
My girlfriend and I recently set out to circumnavigate the globe without the aid of any aircraft. Along the way, we took the Trans-Siberian Railway across the wilds of Russia from Moscow to Vladivostok, and drove a car through the empty doomlands of the Australian outback. These journeys take less than half a day if you go by plane. Each lasts nearly a week when you stick to the ground. But taking to the air means simply boarding, enduring the flight and getting off at another airport. Going our way meant sharing bread and cheese with kindly Russians in a shared train cabin, and drinking beers with Australian jackaroos (we’d call them cowboys) at a lonely desert roadhouse. These are warm, vivid memories that will stay with us forever.
Think of the trans-Atlantic flights you may have taken. Do you remember anything about them? (Turbulence, bad in-flight movies and screaming children don’t count.) Because flying is an empty, soulless way to traverse the planet, the best flights are in fact the ones you forget immediately after hitting the tarmac.
Now, imagine floating across the Atlantic on a ship. Do you think you might enjoy those days of transit — the joys of a starry night in the middle of the ocean, or a round of drinks with new friends as you look out across the stern railing at the glimmering water — and hold them in your memories well after your vessel made landfall?
My hope is that some travelers stranded by the volcanic eruption have been able to discover the joys of slow travel for themselves. With airplanes out of the picture over the past few days, pretty much the only form of public transport between the United States and Europe has been aboard the Queen Mary II, making one of her weeklong treks between New York and Southampton, England, or on one of the select few container ships that will rent spare cabins to civilian passengers.
I can vouch for the container ship option, having taken a nine-day-long freighter passage from Philadelphia to Antwerp as part of my globe-circling trip. You can hang out on the navigational bridge with the officers, who will teach you to chart a course. You eat your meals with the crew in the mess room. You spot broad-winged seabirds and enormous whales and pods of dolphins.
Were you to see a plane flying overhead, you’d look up at its contrail and pity those poor people shrieking through the sky in a cramped aluminum tube. They will arrive days before you, sure. But they will have missed out on the wonders of a journey where there is no choice but to sit back, relax and pleasantly ruminate, as the ship chugs steadily through the waves.
Friday, April 16, 2010
Did you ever wonder?
Did you ever wonder? If you're doing the right thing? Is the job you're in right for you? Should you be doing something else? Where is the best use of your skills? Your talent? Your passion? Are you in a job because you have obligations ( I was for years)? Are you doing something because it pays you enough to support your habits and those that your family has gotten used to? Did you ever wonder? What would it be like to do something different? Something special? Something meaningful? Did you ever wonder how future generations will remember you? Will they remember you? Will they speak about you? What will they say? Did you ever wonder? Thinking about your life is not easy. It's something we all probably push aside because it's, well, too close to home. But did you ever wonder what is the meaning of your life? Or are you afraid to think about it? Don't be afraid to admit it because I think that most of us are afraid to think of such 'big' things in our lives. And maybe, from time to time, like when there's a tragedy like a friend dying young, or when my Dad died, or when the Polish group died in a terrible and seemingly avoidable plane crash last week, is when these thoughts resurface-when I realize that you just never know, we just don't know.This week, thanks to the kind invitation from UBS to attend their annual investor conference in Dallas, I had another opportunity to be a detached observer of the business of institutional real estate management. One thing that struck me is that once you prove to investors that you are a prudent and trustworthy guardian of their money, they will continue to trust you. With all the talk about the problems that have occurred in our industry, it is perfectly clear to me that if we stick with the basic rules of engagement in any client/service provider relationship, we can weather any storm. To me, those include the idea of 'no surprises' and communicating regularly, whether the news be good or bad and particularly when the news is bad. I think that too often, we may forget to put ourselves in the shoes of our client and remember what they deal with in their daily jobs. And that too is one of the basics of being a successful service provider.
I've been fortunate to have seen some pretty impressive buildings including a trip to Dubai a few years back. But this week, I was awed during a visit to the Dallas Cowboy's football stadium. Statistically the stadium is the largest domed stadium in the world, has the world's largest column-free interior and the largest high definition video screen. The stadium cost $1.4Bn, has 800 concession stands, 3,000 Sony flat screen TV's and 1,600 toilets. But those are just numbers. It's not possible to describe this structure in words and even photos don't convey the enormity of the space. I'm not a football fan although my brother, Jay, adopted the Cowboys as his first team many years ago (must've been those cheerleaders!). And, while this is a monument to excess, from a structural awe standpoint you may want to take a tour if you're in the area.
On what may be the other end of the spectrum, we also got to spend time in the Dallas Arboretum which is truly a beautiful and serene property. Spring allergy symptoms aside, it's also a wonderful place to spend some 'get-away' time when you're in Dallas.
Someone who reads this column wrote me last week and said, "Can you please tell me exactly what you do?" I thought it was a fair question and here's the answer: When I first started publishing this column I was working for Institutional Real Estate, Inc (the publishers of The Institutional Real Estate Letter and producer of several industry conferences). When I left IREI in the summer of 2008 I started publishing the same column but through this site (Interestingly, not a week goes by when someone-actually this week there were a number of folks-come up to me and tell me they used to enjoy getting my weekly column and I tell them I've been publishing it all along and steer them to this site-so from a shameless self-promotional standpoint-if you know anyone who you think might be interested in this please pass it along). In the fall of 2008 I joined Aviva Investors North America as Head of Real Estate Client Relations. I'm part of the global real estate multi-manager group that has $6.3 billion in assets under management and my job is to grow that business.
Interesting tidbit from this week's RCA report on workouts:
While modification and restructuring of existing loans remains the preferred strategy, dispositions have also increased. The growth in sales activity has been well received by investors, many of which are starved for distressed situations. Consequently, lenders have not had to discount pricing further as they ramp up dispositions. The more than $18 billion of distressed situations resolved or restructured in just the first quarter of this year was equal to the total amount resolved in the first three quarters of 2009.
We're on the precipice of opportunity in the global institutional real estate world. Some will play it safe; others will 'go contrarian.' No matter what direction people choose to pursue, and even if their decision is to 'do nothing', there are no guarantees, only educated guesses and that's what makes things exciting right now. A lot of very smart people are in a way placing bets that the path they choose will be the one that in hindsight will prove to have been the right one. And, there are more possibilities than ever before. It's one of those rare times when the opportunity for wealth creation exists and even some of those who were able to create wealth in the early 1990's are wondering what to do. It's going to be a very, very interesting next few years, don't you think?
Btw: If you woke up this morning and felt you wanted to go shopping for a loan or an REO asset you may want to check out the Carlton Exchange
On the road....
April 17-21: Vacation in Tuscany
April 22-23: Venice for the INREV annual conference
April 26-30: New York
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Photos: Dallas Arboretum
These are my views and not that of my employer.
Friday, April 9, 2010
EXTRA: FIREMEN RESCUE CHAISE LOUNGE CUSHION!
From what I'm hearing, it seems like the 'cloud' is starting to lift over the institutional real estate industry. Pension funds, endowments and foundations, some of which have been dormant for up to two years, are starting to talk about maybe putting new money into real estate sometime in 2010. Clearly, the challenges are not over yet. Issues regarding placement agents, uncalled capital commitments, valuations, the need for rescue capital and where in the world do you put your money are all things that continue to weigh on the minds of investment committees. And, the institutional real estate world today, more than ever, is one that requires extreme patience, perhaps more than ever before. And those who have the patience will be the winners; it's just that in a business that is built upon the intoxication of the deal, whether it's raising capital or spending it, patience has never been a trait that is universally found with certain companies or certain individuals. But we're dealing with a new world order and you either play by the new rules or you find yourself another game to play.
Relationships have always been important to me. Actually, throughout my business career, I have probably spent more time on building, maintaining and growing relationships than I even spent on trying to lease space in distressed shopping centers. And, over the years, I have read articles and books on such things as 'relationship selling.' I've never had any formal training. But, what I was really doing all along was building relationships based on trust and reliability and consistency. It has always been pretty much second nature to me. So when I read a instruction book on the importance of relationships, well, there's a lot that I already do. So, having said that, you may wonder why I recently read a book called "The Relationship Edge in Business?" I bought it used on Amazon a couple of months ago and have forgotten where I heard about it but like most things, I found something of interest and offer it to you:
Sometime in your life you have seen or heard of a fireman climbing up in a tree to save a cat, right? Well, I have a little story that goes several steps beyond. On a beautiful sunny day a couple of weeks back in New York, I'm sitting on the front stoop, eating a tuna sandwich, and when I look up I see this fire truck stopped just a few doors down. Six full dress firemen get off the truck but they don't seem to be in much hurry. I can't figure out what's going on. So, some of the neighbors are outside now and looking up at something in a tree. I'm trying to figure out what the heck it is when I realize it's the cushion from a deck chair. Why, I ask myself, is a NYC firetruck and team taking time to respond to this call. Well, when the 'mission' was starting, one of the firemen was doing 'crowd control' on the sidewalk and I asked him what was going on. "Someone called in an 'emergency' and we had to respond." Emergency! Who has that kind of audacity to make a call like that over something like this. But the firemen, did what they came for, although it took them a good 45 minutes as the cushion was not too cooperative and they had not had this kind of training at the academy. Anyway, I guess what got me was the idea that someone would make this kind of call and take this fire company away from something really important. What a world!
On the road....
April 12-14: Dallas for the UBS Client Conference
April 15: New York
April 16-21: Vacation in Tuscany
April 22-23: Venice for the INREV annual conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Service of the week: Life History Books helps you record personal memories, anecdotes and family history in a customized oral history book accented by your photos, recipes and other mementos saved through the years. For someone sentimental like me, and maybe you too, this is a great idea.
These are my views and not that of my employer.
Relationships have always been important to me. Actually, throughout my business career, I have probably spent more time on building, maintaining and growing relationships than I even spent on trying to lease space in distressed shopping centers. And, over the years, I have read articles and books on such things as 'relationship selling.' I've never had any formal training. But, what I was really doing all along was building relationships based on trust and reliability and consistency. It has always been pretty much second nature to me. So when I read a instruction book on the importance of relationships, well, there's a lot that I already do. So, having said that, you may wonder why I recently read a book called "The Relationship Edge in Business?" I bought it used on Amazon a couple of months ago and have forgotten where I heard about it but like most things, I found something of interest and offer it to you:
I. Thirteen ways to gain respect
a. Be genuinely interested in the other person
b. Do what you say when you say you will or say nothing
c. Be knowledgeable, be inquisitive or be quiet
d. Control you emotions; anger manages everything poorly
e. Be honest and straightforward
f. Be objective and avoid appearing biased
g. Be persistent but never aggressive
h. Be a learned person with some expertise and share your knowledge when appropriate
i. Be courteous to everyone
j. Always listen to the other person intently
k. Seek to understand other people and their points of view
l. Do things that demonstrate your unselfish nature
m. Find out what people want and help them get it
Sometime in your life you have seen or heard of a fireman climbing up in a tree to save a cat, right? Well, I have a little story that goes several steps beyond. On a beautiful sunny day a couple of weeks back in New York, I'm sitting on the front stoop, eating a tuna sandwich, and when I look up I see this fire truck stopped just a few doors down. Six full dress firemen get off the truck but they don't seem to be in much hurry. I can't figure out what's going on. So, some of the neighbors are outside now and looking up at something in a tree. I'm trying to figure out what the heck it is when I realize it's the cushion from a deck chair. Why, I ask myself, is a NYC firetruck and team taking time to respond to this call. Well, when the 'mission' was starting, one of the firemen was doing 'crowd control' on the sidewalk and I asked him what was going on. "Someone called in an 'emergency' and we had to respond." Emergency! Who has that kind of audacity to make a call like that over something like this. But the firemen, did what they came for, although it took them a good 45 minutes as the cushion was not too cooperative and they had not had this kind of training at the academy. Anyway, I guess what got me was the idea that someone would make this kind of call and take this fire company away from something really important. What a world!
On the road....
April 12-14: Dallas for the UBS Client Conference
April 15: New York
April 16-21: Vacation in Tuscany
April 22-23: Venice for the INREV annual conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Service of the week: Life History Books helps you record personal memories, anecdotes and family history in a customized oral history book accented by your photos, recipes and other mementos saved through the years. For someone sentimental like me, and maybe you too, this is a great idea.
These are my views and not that of my employer.
Friday, April 2, 2010
Trains, Planes and Derilict Taxis Driven by Derilicts in One U.S. State Capital
Every generation mourns. It's not just family or friends but people who we have admired either for what they stand for or what they accomplished or contributed. My first feeling of mourning was for JFK whom my mother told me was going to be a catalyst for big, positive change in America (and whom I saw up-close when he was on the campaign trail and always remembered how the audience, at an outdoor venue in Rego Park, New York, would almost not let him talk as their exuberance for him could not be contained; he stood on the podium for many minutes with a huge smile, just saying 'Thank you" over and over again). My most recent and continuing experience with mourning is about my father. But mourning over a 'figure' as opposed to a family member or friend, while different, nevertheless reminds us of the uncertainty and brevity of life, or perhaps of this life. It's particularly poignant when someone 'young' dies as happened this week when David Mills, a highly respected TV writer and producer, died of a brain aneurysm at age 48. He was shooting a scene for the show“Treme”, which he created, at Cafe du Monde in the French Quarter of New Orleans and was sitting in a director’s chair when he suddenly slumped over. He was taken to Tulane Medical Center, where he died without regaining consciousness. “He was talking to someone who turned away for a minute, and when he turned back, David was just, well, gone,” said one of his colleagues. Blam! Just like that. I find that reading the obituary section of the New York times is a wonderful way to learn about people albeit after they have left. Some of the anecdotes that are written in those columns are wonderful snapshots of a person, whether they contain a quote from the person themselves or from someone who knew them well. When I first discovered the book "Type A Behavior and Heart Disease" in 1985, one of the exercises recommended for those who wanted to rehabilitate themselves from Type A behavior was to write your own obituary from time to time. The idea was to see how you saw yourself and whether you were happy about that and how others might see you. To this date I have still not written my own but I have had modest success with my own Type A rehabilitation program. All of which is to say that as we experience or read about people passing on, our time is also tick, tick, ticking away. And each day we have the opportunity to choose how we want to be remembered and do something about it. Maybe writing our own obit from time to time is something to think about. Since Butler beat Syracuse in the NCAA's I've been rooting for them. Now that they're in the final four which is being played in their hometown of Indianapolis, it's becoming a great story for the media; comparing the situation to the movie "Hoosiers" (one of my very favorites). It's cool when art resembles real life and also cool in the reverse. And, as I do believe in destiny, I have a feeling that they are going to win. I'm a sucker for stories like this!
Here's a good summary of the MIPIM conference.
While I had seen this (and maybe even shared it with you already) I got it this week from my friend, Pepijn Morshuis of The Ibus Group in the Netherlands and wanted to share it with you again.
"At a Washington, DC Metro Station a man with violin played 6 Bach pieces for about 45 minutes. During that time approx. 2000 people went through the station. After 3 minutes a middle aged man slowed his pace and stopped for a few seconds and then hurried on. 4 minutes later the violinist received his 1st dollar. A woman threw the money in the hat without stopping and continued to walk. 6 minutes: A young man leaned against the wall to listen to him, then looked at his watch and started to walk again. 10 minutes: A 3yr old boy stopped but his mother tugged him along hurriedly. The kid stopped to look at the violinist again, but the mother pushed hard & the child continued to walk, turning his head all the time. This action was repeated by several other children. The musician played continuously for an hour. Only 6 people stopped and listened for a short while. The violinist was Joshua Bell, one of the greatest musicians in the world. He played one of the most intricate pieces ever written, with a violin worth $3.5m. 2 days before he had sold out a theatre in Boston. Joshua Bell playing incognito in the Metro Station was organized by the Washington Post as part of a social experiment about perception, taste, and people's priorities. The questions raised was "In a common place environment, at an inappropriate hour, do we perceive beauty? Do we stop to appreciate it? Do we recognize talent in an unexpected context?" So – stop and smell the roses this weekend!"
On the road....
April 5-9: West Coast
April 12-14: Dallas for the UBS Client Conference
April 16-21: Vacation in Tuscany
April 22-23: Venice for the INREV annual conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Photo: An erie photo of the Empire State Building early this week.
These are my views and not that of my employer.
Friday, March 26, 2010
Spring PREA with Henry Kissinger
Well, Syracuse beat themselves last night. It's been a wild tournament hasn't it?
There are things going on in the world today that are stretching our ability to forgive. Forgiveness is one of most important things we can do to progress as a society and as individuals. But, failure to be responsible or hiding under the robes of an institution when innocent young people are being abused...well, I don't know about that. But this week, when face to face with Henry Kissinger, I felt like I forgave him for what he did to promote and extend the Vietnam war which caused thousands more young Americans to die. My interaction with Dr. Kissinger was at the Spring Pension Real Estate Association meeting in Boston. He and Charlie Rose were the opening act. His talk and most of the questions asked were about world affairs but, sitting at a stage-left front table, I got to ask him a question: "Dr. Kissinger, as you look back on your life, is there anything you wish you had done differently?" He and Charlie both laughed and Kissinger, looking directly at me, said "I better have a good answer for that question because if I say "No" I'll sound like an arrogant bastard!" But watching Kissinger up close reinforced my belief that one of the keys to staying alive and ‘with it’ for a long time is keeping your mind active. Clearly he has a big advantage to most in that country and industry leaders still seek his advice. But many senior citizens have experience that we can learn from and the mutual benefit of being asked to share and learning from what is shared should be nurtured more. I'm working on an idea on this subject.
There were 700 people at PREA this week. I believe it was the largest ever turnout for their spring conference. The atmosphere may have been a little too buoyant but we are an optimistic industry aren't we? There were some very good panel discussions and PREA should be congratulated.
Here are just a few of my takeaways. If you'd like a copy of all of them (for whatever they're worth) just let me know and I'd be happy to send them to you. But, in the future, it'd be worth your while to attend a PREA conference. The whole institutional real estate world was there!
Spring PREA Notes & Quotes
I. Henry Kissinger/Charlie Rose
a. The Mao generation in China and some after that are more Yuppie than Wall Street; they don’t interfere with government if the government lets them make a lot of money.
b. An important part of diplomacy is consultation before a meeting so that parties that may disagree know what the parameters are in advance so that there are no surprises
c. As a leader you are judged on your ability to translate what you say into concrete action
d. The art of diplomacy is to get your adversary to want what is in the common interest.
II. Roy March Panel
a. David Simon on retail:
i. 2010 will be tough
ii. the demand for retail space will not be strong enough to absorb all the store closings
iii. Highest demand for retail space is on the outlet side of the business
iv. Full-price retail: too many stores, obsolescence, not enough demand, prospect for significant new development doesn’t exist for the foreseeable future
b. Alan Leventhal on office:
i. Short term no significant improvement; fundamentals are very weak
ii. In early 2010 leasing is coming from the healthcare, education and technology sectors
iii. We want to see no new supply for a long time because it’ll be a slow recovery
c. Barry Sternlicht on hospitality:
i. Nothing will get built going forward for a while
ii. This is not a normal recovery from a recession. Right now the U.S. is behaving as if it’s on steroids
iii. When I left Starwood in 2005 I told the board, “Elmer Fudd could run this company.”
iv. Collusion amongst the hotel companies (on room rates) would surprise people
III. Debt Panel: Dean Adler/Tom Barrack
a. Only the existing borrower can approach the FDIC to restructure their loan but they have to use outside capital to do it
b. At each level of the capital stack the challenge is to get to the asset without going through a competitive auction process
c. All the talk about buying distressed debt has been about pricing; people are not talking about the execution capability necessary to realize the value
d. The FDIC is good because they’re a willing seller; but right now there are too many willing buyers who are driving prices up
e. If there is a way to get involved with the borrower you have a chance to get to the asset without going through the competitive bidding process
f. If you hold real estate long enough it will disappoint you
On the road....
March 30-31: New York
March 31: Cincinnati
April 1: Albany, New York
April 5-9: West Coast Trip
April 11-14: Dallas to attend the UBS Investor Conference
April 16-21: Tuscany (Vacation)
April 21-23: Venice for the annual INREV Conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
May 17: Cleveland
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Photo: Sean Felix auditioning for a
These are my views and not that of my employer.
There are things going on in the world today that are stretching our ability to forgive. Forgiveness is one of most important things we can do to progress as a society and as individuals. But, failure to be responsible or hiding under the robes of an institution when innocent young people are being abused...well, I don't know about that. But this week, when face to face with Henry Kissinger, I felt like I forgave him for what he did to promote and extend the Vietnam war which caused thousands more young Americans to die. My interaction with Dr. Kissinger was at the Spring Pension Real Estate Association meeting in Boston. He and Charlie Rose were the opening act. His talk and most of the questions asked were about world affairs but, sitting at a stage-left front table, I got to ask him a question: "Dr. Kissinger, as you look back on your life, is there anything you wish you had done differently?" He and Charlie both laughed and Kissinger, looking directly at me, said "I better have a good answer for that question because if I say "No" I'll sound like an arrogant bastard!" But watching Kissinger up close reinforced my belief that one of the keys to staying alive and ‘with it’ for a long time is keeping your mind active. Clearly he has a big advantage to most in that country and industry leaders still seek his advice. But many senior citizens have experience that we can learn from and the mutual benefit of being asked to share and learning from what is shared should be nurtured more. I'm working on an idea on this subject.
There were 700 people at PREA this week. I believe it was the largest ever turnout for their spring conference. The atmosphere may have been a little too buoyant but we are an optimistic industry aren't we? There were some very good panel discussions and PREA should be congratulated.
Here are just a few of my takeaways. If you'd like a copy of all of them (for whatever they're worth) just let me know and I'd be happy to send them to you. But, in the future, it'd be worth your while to attend a PREA conference. The whole institutional real estate world was there!
Spring PREA Notes & Quotes
I. Henry Kissinger/Charlie Rose
a. The Mao generation in China and some after that are more Yuppie than Wall Street; they don’t interfere with government if the government lets them make a lot of money.
b. An important part of diplomacy is consultation before a meeting so that parties that may disagree know what the parameters are in advance so that there are no surprises
c. As a leader you are judged on your ability to translate what you say into concrete action
d. The art of diplomacy is to get your adversary to want what is in the common interest.
II. Roy March Panel
a. David Simon on retail:
i. 2010 will be tough
ii. the demand for retail space will not be strong enough to absorb all the store closings
iii. Highest demand for retail space is on the outlet side of the business
iv. Full-price retail: too many stores, obsolescence, not enough demand, prospect for significant new development doesn’t exist for the foreseeable future
b. Alan Leventhal on office:
i. Short term no significant improvement; fundamentals are very weak
ii. In early 2010 leasing is coming from the healthcare, education and technology sectors
iii. We want to see no new supply for a long time because it’ll be a slow recovery
c. Barry Sternlicht on hospitality:
i. Nothing will get built going forward for a while
ii. This is not a normal recovery from a recession. Right now the U.S. is behaving as if it’s on steroids
iii. When I left Starwood in 2005 I told the board, “Elmer Fudd could run this company.”
iv. Collusion amongst the hotel companies (on room rates) would surprise people
III. Debt Panel: Dean Adler/Tom Barrack
a. Only the existing borrower can approach the FDIC to restructure their loan but they have to use outside capital to do it
b. At each level of the capital stack the challenge is to get to the asset without going through a competitive auction process
c. All the talk about buying distressed debt has been about pricing; people are not talking about the execution capability necessary to realize the value
d. The FDIC is good because they’re a willing seller; but right now there are too many willing buyers who are driving prices up
e. If there is a way to get involved with the borrower you have a chance to get to the asset without going through the competitive bidding process
f. If you hold real estate long enough it will disappoint you
Tidbits from RCA's Month in Review:
- The commercial property investment market continues to improve at a modest pace.
- Increasing sales activity is set to continue into March
- Any encouraging signals in the investment market need to be tempered by the continued and heavy stream of properties falling into default, foreclosure or bankruptcy.
On the road....
March 30-31: New York
March 31: Cincinnati
April 1: Albany, New York
April 5-9: West Coast Trip
April 11-14: Dallas to attend the UBS Investor Conference
April 16-21: Tuscany (Vacation)
April 21-23: Venice for the annual INREV Conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
May 17: Cleveland
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Photo: Sean Felix auditioning for a
vacuum cleaner commercial (just kidding!)
These are my views and not that of my employer.
Friday, March 19, 2010
Spring has sprung
It’s hard to believe that another week is gone and I’m writing to you again. I guess that I’m thinking about that unit of time in terms of what I accomplished this past seven days, what conversations I had, what I learned, what I saw and what I didn’t do. In the last category, one of the things I’ve been delinquent about is a request from one of my daughters-in-law to document as much as I remember about growing up so that her son, my grandson, will be able to know more about his family. I have done it as memories have surfaced but think that I need to be a little more diligent about that project. I have also still not seen the very vocal frog that's been living in the pond in front of our house for some time. He, I don’t know why I assume it’s a he, talks to us, knows when we’re around and is able to keep his whereabouts secret. And as I type this now, he/she is saying “Welcome to the day. Isn’t it a great morning?” One accomplishment this week was the closing, not without some last minute angst, a refinancing of our home mortgage (4.65%/30 year fixed) which, as you might imagine, underwent a much higher level of underwriting than in the past. But it did get closed (although I had to spend quite a bit of time on the phone with the new lender (who is also the old lender) and every time I called hearing their ‘on hold’ messages about how much they focus on customer service and would I be willing to take a customer survey after the call when all I wanted to do was understand why, if they are so focused on customer service, did I have to call seven times and speak with supervisor upon supervisor to actually get something done. Another accomplishment was the arranging of meetings, some as far out as mid-May but with everyone's schedules being so hectic at this time of year I felt good about that. And, not least, I learned more about myself and what makes me tick: the eternal journey.
I had some interesting conversations ranging from the usual in my average week of trying to find the needle in the haystack of institutional real estate investors, the challenges posed by the Internet of being a parent of a 12 year old boy, the shortage of pension funds in attendance at MIPIM this year, and how to attract more attendees to an industry conference this coming fall. But overriding all of that was something more predictable and yet beautiful: the coming of spring. For all my life I’ve lived in climates that have multiple seasons and while I love the Fall, the Spring has always been my favorite. I was talking with someone this week who described it simply, “Spring brings hope.” And seeing the buds on the trees start to turn into leaves and the perennial stuff start shooting up from the ground and everything being so green makes me feel renewed as well. But it’s also an indication that another season has passed and time is marching on. Talk of things happening in the 1Q10 better happen soon or they’ll slip into 2Q10 or beyond. But, as much as we’d like to think we do, some of those things we have no control over; we can only do our best to make them happen. Perhaps what is most obvious is how little control we have over anything in our lives. Maybe giving up and letting go, doing the right thing, being a good friend, smiling a lot and not taking ourselves too seriously are on the path to happiness and self-fulfillment. But if we measure ourselves on daily accomplishments we will be disappointed, time after time. So, as you move into your weekend, don’t be too tough on yourself, enjoy the spring (if you’re in a climate where spring has sprung) or just “Picture yourself, on a boat on a river, with tangerine trees and marmalade skies” and smile. Trust me. You’ll feel better, about everything.
I just learned about an excellent offer that RCA (Real Capital Analytics) makes to academics (students and faculty). If you qualify, you can go here and sign up to receive free RCA Trend Reports. Matt Stone at RCA tells me that they have a number already taking advantage of this but if you are a student you should check it out and if you know someone who is a student or a faculty member please feel free to forward this on to them.
Some stuff from MIPIM reported on Creopoint
Some stuff from MIPIM reported on Creopoint
1. 2/3 of attendees surveyed by a student group from the University of Wisconsin plan to hire in ...2011.
2. Investors are moving away from risk to hard core
And other MIPIM stuff reported by REP regarding a JLL presentation on EMEA
1. The money is chasing very limited product in light of alternative asset returns.
2. Whilst the market will remain equity driven, new players are emerging and there will be greater polarisation and differentiation between the best and worst performers.
3. Investors who proved themselves trustworthy and stuck to successful strategies in the downturn will be tomorrow’s winners and will attract an increasing share of capital flows.”
2. Investors are moving away from risk to hard core
And other MIPIM stuff reported by REP regarding a JLL presentation on EMEA
1. The money is chasing very limited product in light of alternative asset returns.
2. Whilst the market will remain equity driven, new players are emerging and there will be greater polarisation and differentiation between the best and worst performers.
3. Investors who proved themselves trustworthy and stuck to successful strategies in the downturn will be tomorrow’s winners and will attract an increasing share of capital flows.”
Restaurant of the week: Boulevard, One Mission St, San Francisco, CA (415 543 6084). Located in the 1889 French-style Audiffred Building, one of the few structures spared from the 1906 earthquake and fire, this place is a throw-back to the black and white photos of that era but the food is modern, simple and clean and the decor is totally cool. Ask for a table in the front so you can get the view of the Bay Bridge.
Photo: Container Freighter, finishing what must've been a long journey, passes under the San Francisco Bay Bridge very close to the end of their journey (Yesterday). On the road....
March 19-22: Northern California
March 23: Rock 'n roll jam with some industry rockers in an unnamed Boston suburb
March 23: Rock 'n roll jam with some industry rockers in an unnamed Boston suburb
March 24-25: Boston for PREA's Spring Conference
March 26-30: New York
March 31: Cincinnati
April 1: Albany, New York
April 5-9: West Coast Trip
April 11-14: Dallas to attend the UBS Investor Conference
April 16-21: Tuscany (Vacation)
April 21-23: Venice for the annual INREV Conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
May 17: Cleveland
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
Good luck to Jimmy Boeheim and the Syracuse Orangemen!
Good luck to Jimmy Boeheim and the Syracuse Orangemen!
These are my views and not that of my employer.
On the road....
March 19-22: Northern California
March 23-25: Boston for PREA's Spring Conference
March 26-30: New York
March 31: Cincinnati
April 1: Albany, New York
April 5-9: West Coast Trip
April 11-14: Dallas to attend the UBS Investor Conference
April 16-21: Tuscany (Vacation)
April 21-23: Venice for the annual INREV Conference
May 13-15: North Palm Beach, FL for the annual Homer Hoyt Institute/Hoyt Fellows conference
May 17: Cleveland
July 13-16: Laguna Beach to attend the NMS Real Estate Roundtable
These are my views and not that of my employer.
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